Postgres 12

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CREATE TABLE tbl (seq int, id text);
INSERT INTO tbl VALUES
  (1,'A1')
, (2,'B1')
, (3,'C1')
, (4,'D1');

CREATE TABLE rpl (id text, alter text);
INSERT INTO rpl VALUES
  ('B1','B2')
, ('D1','D2');
4 rows affected

2 rows affected

-- general purpose function
CREATE OR REPLACE FUNCTION f_allcombos(_len int)
  RETURNS SETOF bool[] LANGUAGE sql IMMUTABLE PARALLEL SAFE AS
$func$
WITH RECURSIVE
   tf(b) AS (VALUES (false), (true))

 , rcte AS (
   SELECT 1 AS lvl, ARRAY[b] AS arr
   FROM   tf

   UNION ALL
   SELECT r.lvl + 1, r.arr || tf.b
   FROM   rcte r, tf 
   WHERE  lvl < _len
   )
SELECT arr
FROM   rcte
WHERE  lvl = _len;
$func$;
-- example for 3 replacement rows
 SELECT * FROM f_allcombos(3) WITH ORDINALITY AS c(arr, grp);


arr
grp


{f,f,f}
1

{t,f,f}
2

{f,t,f}
3

{t,t,f}
4

{f,f,t}
5

{t,f,t}
6

{f,t,t}
7

{t,t,t}
8


-- final query
WITH effective_rpl AS (
   SELECT *, count(alter) OVER (ORDER BY seq) AS idx
   FROM   tbl LEFT JOIN rpl USING (id)
   )
SELECT c.grp, e.seq
     , CASE WHEN alter IS NOT NULL AND c.arr[e.idx] THEN e.alter
            ELSE e.id END AS id
FROM   effective_rpl e
     , f_allcombos((SELECT count(alter)::int FROM effective_rpl)) WITH ORDINALITY AS c(arr, grp)


grp
seq
id


1
1
A1

1
2
B1

1
3
C1

1
4
D1

2
1
A1

2
2
B2

2
3
C1

2
4
D1

3
1
A1

3
2
B1

3
3
C1

3
4
D2

4
1
A1

4
2
B2

4
3
C1

4
4
D2

arr	grp
{f,f,f}	1
{t,f,f}	2
{f,t,f}	3
{t,t,f}	4
{f,f,t}	5
{t,f,t}	6
{f,t,t}	7
{t,t,t}	8

grp	seq	id
1	1	A1
1	2	B1
1	3	C1
1	4	D1
2	1	A1
2	2	B2
2	3	C1
2	4	D1
3	1	A1
3	2	B1
3	3	C1
3	4	D2
4	1	A1
4	2	B2
4	3	C1
4	4	D2

grp	seq	id
1	1	A1
1	2	B1
1	3	C1
1	4	D1
2	1	A1
2	2	B2
2	3	C1
2	4	D1
3	1	A1
3	2	B1
3	3	C1
3	4	D2
4	1	A1
4	2	B2
4	3	C1
4	4	D2

grp	seq	id
1	1	A1
1	2	B1
1	3	C1
1	4	D1
2	1	A1
2	2	B2
2	3	C1
2	4	D1
3	1	A1
3	2	B1
3	3	C1
3	4	D2
4	1	A1
4	2	B2
4	3	C1
4	4	D2